Should Ontario Adopt a $15 Minimum Wage?

The Ontario Liberal government may overhaul Ontario’s employment laws, including increasing the minimum wage to $15.00 per hour. The potential change comes in response to the recommendations of the Changing Workplaces Review, which is set to release its final report soon.

Ontario Changing Workplaces Review

Back in 2015, the government launched the Changing Workplaces Review to identify areas in Ontario’s employment law in need of an update. The Changing Workplaces Review examined how the government could help employees in so-called ‘precarious’ work situations, like part-time and contract workers.

The Review released over 200 recommendations its interim report earlier this year, including a minimum number of paid sick days and making it easier for franchise employees to unionize. It appears both these suggestions are set to go up for debate in the provincial legislature.

During the 2014 provincial election campaign, Premier Kathleen Wynne promised to raise the minimum wage in Ontario in line with the rate of inflation. The Liberal government followed through with this promise, raising the minimum wage from $11.25 to 11.40 in 2016.

A $15 minimum wage increase was not part of the Liberal campaign, nor was it part of the Changing Workplaces mandate. However, labour groups have advocated for a $15 minimum wage in Ontario for some time now, and Ontario NDP has committed to a $15 minimum wage since 2015.

Arguments for a $15 Minimum Wage

Since 2015, the government has increased the minimum wage every October to keep up with the rate of inflation. Some advocates argue that while this increase helps absorb the cost of housing, food, and transportation, it does not increase the purchasing power for low-wage workers.

“Most small businesses will tell you the most important thing they need is customers and if workers don’t have money to spend, they can’t participate in the economy,” says Pam Freche, a coordinator with the group Fight for $15 and Fairness.

The Ontario Federation of Labour also supports a $15 minimum. “We support immediately providing a basic income, but the income must be responsive to changes in earnings, the cost of living, and provide a standard of living above the poverty line,” argues OFL president Chris Buckley.

Kaylie Tiessen, an economist with the Canadian Centre for Policy Alternatives, argues for benchmarking the minimum wage against the average industrial wage as an “implicit recognition of the inherent value of all work in an economy.” Tying the minimum wage to be within 50-60% of the average would put Ontario’s minimum wage at — you guessed it — $15 an hour.

Arguments Against a $15 Minimum Wage

Economists and business owners differs on whether raising the minimum wage is the right thing to do. Part of the debate centres on whether an increase, intended to help low-income workers, would instead result in job losses for those at the bottom of the scale.

“If your productivity is $20 an hour and the minimum wage is $25 an hour, it’s just a simple game,” says Steve Hanke, an economics professor at John Hopkins University. “You can’t afford to keep people unless the owner of the business decides they will subsidize them in some way.”

When the New Democratic government of Alberta committed to raise the minimum wage to $15 by the end of 2018, the Canadian Federation of Independent Businesses predicted the increase would cost the province as many as 50,000 jobs. “Job losses from minimum wage increases can take the form of hiring freezes, slower employment growth, or direct job cuts during an economic downturn,” the CFIB states.

At this point in time, the Liberal government of Ontario has no concrete plans to raise the minimum wage. But with a provincial election on the horizon and the NDP committed to a $15 raise, the debate is not going anywhere soon.